DESNZ Warm Homes Fund: call for evidence - Which? response

Which? welcomes the opportunity to provide evidence to support the development of the Warm Homes Fund. Our answers focus on opportunities for the Warm Homes Fund to support homeowners to make home energy upgrades through the provision of safe financial products that meet consumers’ needs. 

The Warm Homes Fund can improve the affordability of home energy upgrades by increasing the choice of financial products that spread the upfront costs of installation and reduce the interest rates charged to consumers.  This will help households that can afford these repayments, however increasing monthly outgoings is not an option for some low and middle income households who are already struggling to make regular payments and making adjustments to meet essential spending. The government offers grant funding for some low income households and the BUS grant for installing heat pumps, but there is a need for targeted support to help households not eligible for full grants but unable to afford additional payments. This should include a mix of grant funding and access to zero interest loans tailored to the household's income. This is critical to ensuring households that are struggling with high energy costs are not excluded from the potential benefits of solar panels, batteries and electrified heating.

We have provided some research findings showing homeowners’ interest in different financial products to fund home energy upgrades, however it is important to recognise that affordability isn’t the only barrier preventing consumers from making these changes. Our research with homeowners that had considered purchasing a heat pump, but were undecided or who had decided not to, suggests that the complexity of the decision and uncertainty about important points, such as the impact on future energy bills and the effectiveness of a heat pump in heating their home, were also significant barriers preventing them from going ahead. The success of the Fund will depend to a large extent on the progress the government and businesses make in providing consumers with greater reassurance around these points.

In relation to the financial products and home energy upgrades that the government supports through the Warm Homes Fund it is important that the government uses this intervention to require high levels of consumer protection. 

• The government should mandate that all home energy upgrades funded by financial products which are supported by the Warm Homes Fund meet required standards and are completed by certified installers. The certification should offer protections not less than is currently available through the Microgeneration Certification Scheme (MCS). 
• Existing financial consumer protections such as section 56, section 75 and section 140a of the Consumer Credit Act should not be watered down or exempted for financial products supporting home energy upgrades, as this moves the burden of risk from lenders to consumers.
• The design of more innovative financial products such as Third Party Ownership agreements must address potential consumer concerns in relation to protection in the event of a default, fair terms and conditions, adding complications or cost to the home selling process, and maintaining the consumers’ ability to choose tariffs and services.
• Consumers need clear information and advice, particularly in relation to innovative financial products. The government and providers should explore the potential to require key information documents that provide clear and comparable information about the products. Intermediaries or comparison services must be transparent about how much of the market they cover.
• The fund should look for opportunities to incentivise the use of Smart Meter Enabled Thermal Efficiency Ratings technology (SMETERS) and other monitoring equipment that provides actual performance data about the measures supported by financial products. This equipment raises standards in the sector and offers real benefits to the homeowner and the financial provider.
• The government should have a clear strategy for ensuring that the availability of additional government funding does not lead to an increase in scams in this sector.